How do you measure cost per hire? This HR metric is widely used, but can be difficult to calculate. Learn how to calculate cost per hire – and what you can do to lower it.

Cost per hire lets you calculate how much it costs to attract a new employee to your company. It’s one of HR ‘s most basic metrics and applies to both internal hires (transfers and promotions within the company) and external hires (employees hired from outside the company).

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Cost per hire – definition

Cost per hire is the average amount of money you spend to hire an employee. In other words, it measures how much it costs you to fill an open position.

The expenses involved in the total hiring costs include:

  • Salaries of internal recruiters
  • Salaries of ​external recruiters
  • Fees for ​job boards
  • Fees for ​recruitment software
  • Relocation ​costs
  • Costs of a referral program
  • Costs of a background check.

How do you calculate the cost per hire?

To calculate the cost per hire, you should add up all your expenses – both internal and external. Then divide that total by the number of hires in a given time period.

For example, if you hired 10 people over a period of 6 months and you spend $40,000, your cost per hire will be $4,000.

The formula to calculate cost per hire

What is the average cost per hire?

According to SHRM, the average cost to hire in the United States is $4,129 per job.

The cost per hire depends on many factors, such as the size of the company, the volume of hires, the seniority of the position you are filling, and the efficiency of the hiring team. Some positions are more difficult to fill and result in a higher cost per hire.

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The average cost-per-hire in the US

How can you reduce the hiring costs?

One of the ways to optimize your cost per hire is to use a specific HR management software or apply people analytics in your company. Thanks to this solution, you can see how efficient your recruitment funnel is, which positions are the most expensive to fill and how much time your recruiters spend filling a vacancy.

If you want to see how it works, subscribe to our demo – it’s an entirely free and non-binding opportunity to watch people analytics in action. Fill in the form below and we’ll contact you within 24 hours.

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